LONDON — Britain’s roiling phone-hacking scandal continues to reverberate deep inside this nation’s power structure, with the head of Scotland Yard, Sir Paul Stephenson, resigning Sunday only hours after Rebekah Brooks, the former chief executive of Rupert Murdoch’s British operations, was arrested.

In a stoic appearance before the news media, Stephenson — Britain’s most senior police official — said he was offering his resignation in light of “ongoing speculation and accusations” relating to his force’s links to senior members of News International, the British division of Murdoch’s News Corp.

The pace of the scandal’s spread raised immediate questions about how high the fallout could go, with Prime Minister David Cameron and Murdoch’s son, James Murdoch, also in the line of fire for, at the very least, possible lapses in judgment.

Cameron, who is traveling in South Africa, said Monday that he wanted Parliament to delay its summer recess so that he can address lawmakers about the scandal on Wednesday. Both Rupert and James Murdoch have agreed to appear before Parliament on Tuesday, when they are likely to be grilled by lawmakers.

Stephenson’s resignation came amid massive criticism of his storied police force’s handling of the scandal, in which employees at the now-shuttered News of the World allegedly hacked the phones of thousands of British citizens — from crime victims to members of the royal family — and bribed police officers for information. Police missteps included the hiring of Neil Wallis, a former top editor at News of the World, as a special adviser to Scotland Yard despite widespread reports of illegal news-gathering at the tabloid during his tenure. Wallis was arrested Thursday.

Reports also surfaced this weekend that Stephenson had accepted a free medical stay at a luxury spa being promoted by Wallis, though Stephenson pointedly insisted Sunday that the former editor had not arranged his visit there.

Stephenson’s departure after 21/2 years in the job caught many here by surprise. The chief maintained on Sunday that his “integrity” remains intact, but he said the focus on him and other high-ranking officers at the Metropolitan Police, more commonly known as Scotland Yard, had become a major distraction at a time when the 51,000-strong force is gearing up for one of its largest special operations ever — the 2012 Olympics in London.

“This is not a 12 months that can afford any doubts about the commissioner of the Met,” Stephenson said. “I have seen at first hand the distractions for this organization when the story becomes about the leaders as opposed to what we do as a service. I was always clear that I would never allow that. We the Met cannot afford this — not this year.”

Protecting prime minister?

In explaining why Scotland Yard had not earlier disclosed to No. 10 Downing Street that Wallis was both a suspect and had been on the force’s payroll, Stephenson appeared to suggest that the information was withheld in part to shield the prime minister. Wallis had what Stephenson called a “close relationship” with Andy Coulson, Cameron’s former communications director and also a former editor at News of the World.

Cameron is under intense fire from the opposition Labor Party for having hired Coulson, who resigned under pressure in January as more details about the scale of the phone-hacking scandal emerged. Coulson was arrested in connection with the scandal this month.

“I did not want to compromise the prime minister in any way by revealing or discussing a potential suspect who clearly had a close relationship with Mr. Coulson,” Stephenson said.

Cameron has maintained that he hired Coulson to give him a “second chance” and was under the assumption that phone hacking at the News of the World had been limited to one isolated case. He has since called for Coulson to be prosecuted if he is found to have lied to the prime minister, the police and the public.

“This scandal has made the prime minister uncomfortable . . . it is not inconceivable that it will have larger effects on his position,” said Andrew Russell, a professor of politics at the University of Manchester.

Of Stephenson’s resignation, Cameron said on Sunday: “While I know that today must be a very sad occasion for him, I respect and understand his decision to leave the Met, and I wish him well for the future.”

Stephenson acknowledged that his force had mishandled the case. After making just two arrests in 2006 and considering wrongdoing at the tabloid an isolated incident, officers dropped the matter. Despite revelations in 2009 by the Guardian newspaper about far wider misdeeds at News of the World, officers reopened the case only under mounting pressure this year.

A dramatic downfall

The upheaval at Scotland Yard came as Brooks, who resigned on Friday as head of Murdoch’s British operations, was arrested on suspicion of conspiracy to intercept communications and of corruption, a reference to bribes allegedly made to police officers for news tips.

The arrest marks a dramatic fall from grace for Brooks, a woman who was both feared and courted by the British political establishment as she rose to become chief executive of News International. She is a friend of Cameron’s and was known to go horseback riding with him in a town 75 miles from London where the two both own rural estates. Brooks headed the News of the World from 2000 to 2003, a time when the paper is said to have engaged in widespread phone hacking.

In 2003, Brooks admitted to Parliament that under her leadership, the News of the World paid police officers for information — an admission that Scotland Yard paid little heed at the time. She has denied any knowledge of phone hacking by the company.

Brooks’s arrest raises the stakes for News Corp., which was forced to drop its bid for the lucrative British Sky Broadcasting Corp. last week. With Brooks — whom Murdoch once described as a being like a daughter to him — facing criminal charges, experts questioned whether James Murdoch, Rupert Murdoch’s 38-year-old son, who oversees News Corp.’s British interests, could become entangled in the scandal.

Britain’s opposition leader, the Labor Party’s Ed Miliband, suggested that Rupert Murdoch’s vast British media holdings should be disbanded, saying in an interview with the Observer that News Corp. has “too much power over British public life.”

It was unclear whether Brooks, who was released on bail early Monday, would also appear before Parliament Tuesday, as originally planned. Analysts said her arrest came amid speculation that she could make revelations Tuesday that may underscore major failures by Scotland Yard in connection with the scandal.

“Clearly the police felt that they needed to proceed as quickly as possible,” said Jonathan Tonge, a professor of politics at the University of Liverpool. “The police may have felt more comfortable moving in today and avoiding awkward questions Tuesday night.”

Special correspondent Eliza Mackintosh contributed to this report.

Anthony Faiola is The Post's Berlin bureau chief. Faiola joined the Post in 1994, since then reporting for the paper from six continents and serving as bureau chief in Tokyo, Buenos Aires, New York and London.

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